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Nordstrom, Inc. (JWN): Hedge Funds Losing Interest

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Nordstrom, Inc. (NYSE:JWN) based on that data.

Nordstrom, Inc. (NYSE:JWN) was in 25 hedge funds’ portfolios at the end of the first quarter of 2020. JWN shareholders have witnessed a decrease in hedge fund interest recently. There were 30 hedge funds in our database with JWN positions at the end of the previous quarter. Our calculations also showed that JWN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Rogers Ariel Investments

John Rogers of Ariel Investments

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s check out the new hedge fund action surrounding Nordstrom, Inc. (NYSE:JWN).

What does smart money think about Nordstrom, Inc. (NYSE:JWN)?

At the end of the first quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards JWN over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Among these funds, Antipodes Partners held the most valuable stake in Nordstrom, Inc. (NYSE:JWN), which was worth $14.3 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $12.8 million worth of shares. AQR Capital Management, Black-and-White Capital, and Ariel Investments were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Pacifica Capital Investments allocated the biggest weight to Nordstrom, Inc. (NYSE:JWN), around 3.03% of its 13F portfolio. Stamos Capital is also relatively very bullish on the stock, earmarking 2.05 percent of its 13F equity portfolio to JWN.

Due to the fact that Nordstrom, Inc. (NYSE:JWN) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there was a specific group of hedge funds that elected to cut their entire stakes by the end of the first quarter. Intriguingly, Lee Ainslie’s Maverick Capital sold off the largest position of the 750 funds tracked by Insider Monkey, totaling close to $10.2 million in stock, and Brian Scudieri’s Kehrs Ridge Capital was right behind this move, as the fund said goodbye to about $8.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 5 funds by the end of the first quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Nordstrom, Inc. (NYSE:JWN) but similarly valued. We will take a look at F.N.B. Corp (NYSE:FNB), Umpqua Holdings Corp (NASDAQ:UMPQ), TopBuild Corp (NYSE:BLD), and LendingTree, Inc (NASDAQ:TREE). All of these stocks’ market caps are similar to JWN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FNB 24 63920 1
UMPQ 23 183885 7
BLD 20 79991 -9
TREE 21 74029 -5
Average 22 100456 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $73 million in JWN’s case. F.N.B. Corp (NYSE:FNB) is the most popular stock in this table. On the other hand TopBuild Corp (NYSE:BLD) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Nordstrom, Inc. (NYSE:JWN) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on JWN as the stock returned 27.4% so far in Q2 (through June 10th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.